Primoris Services Corp (NYSE: PRIM)

Primoris Services Corporation is a leading provider of critical infrastructure services operating mainly in the United States and Canada. The company delivers construction maintenance replacement and engineering services to a diversified base of customers through its Utilities and Energy segments. It serves solar facility developers power producers gas and electric utilities refining petrochemical communications midstream downstream engineering firms and transportation agencies. Primoris Services Corporation builds long term relationships and provides services under master service agreements as well as specific project contracts. The firm leverages its technical expertise and equipment fleet to support projects ranging from routine maintenance to large scale capital improvements. Its operational focus is on delivering safe reliable and timely solutions that meet the evolving needs of infrastructure owners.

The company generates revenue primarily from fees for construction maintenance and engineering work performed under master service agreements and from individual project contracts. Master service agreements are generally multi year arrangements that provide a menu of services priced on a unit price or time and material basis. The remainder of revenue comes from fixed price unit price or cost reimbursable plus fixed fee contracts for specific construction or installation projects. Customers are billed based on completed units hours or agreed lump sums depending on the contract type. In recent years a portion of total revenue has consistently come from master service agreement work reflecting the stability of recurring revenue streams. The mix of recurring and project based revenue allows Primoris Services Corporation to balance predictable cash flow with opportunities for higher margin work.

The company operates through the following segments: Utilities and Energy. These segments are defined by the end markets they serve rather than by geography.

• Utilities segment focuses on the construction and maintenance of new and existing natural gas and electric utility distribution and transmission systems as well as communications infrastructure throughout the United States. Activities include installing pipelines laying conduit erecting poles and performing upgrades to aging networks. The segment also provides emergency restoration services after storms and other events that disrupt service. Its work supports the reliable delivery of power and gas to homes and businesses.

• Energy segment provides engineering procurement construction and maintenance services for entities in the energy renewable energy and energy storage renewable fuels and petroleum and petrochemical industries as well as for state departments of transportation across the United States and Canada. Services range from front end engineering design to full scale plant construction and ongoing facility maintenance. The segment supports projects such as solar farms wind farms biofuel refineries and pipeline terminals. It also assists transportation agencies with roadway improvements and bridge work that require specialized construction expertise.

Primoris Services Corporation holds a strong position in the infrastructure services market competing with firms such as Quanta Services Dycom Industries MYR Group and MasTec in the utilities sector and with PCL Kiewit Performance Contractors and Boh Brothers in industrial projects. In the renewables market it faces competition from Blattner Energy and Mortenson while in highway services it contends with Sterling Construction Company and Zachry Construction Company. The company’s competitive advantages include a reputation for quality safety schedule certainty relevant experience availability of skilled labor and equipment ownership that reduces reliance on third party suppliers. Its stable workforce of cross trained craft professionals and disciplined bidding approach further support its ability to win profitable work. Primoris Services Corporation also benefits from a long history of successful project execution which enhances its credibility with customers and partners. The firm’s commitment to safety and training contributes to lower incident rates compared to industry averages.

The company serves a diverse customer base that includes solar facility developers power producers gas and electric utilities refining petrochemical communications midstream downstream engineering firms and transportation agencies. Specific customers named in the filing are Xcel Energy Pacific Gas & Electric Southern California Gas Oncor Electric Duke Energy Sempra Energy Williams Hecate Energy Consumers Energy Dominion Valero D. E. Shaw Renewable Investments Entergy Florida Power and Light Intersect Power Avantus ExxonMobil Enterprise Pipeline Texas Department of Transportation and Louisiana Department of Transportation and Development. Revenue is often concentrated among a small number of top customers with the top ten accounts representing over half of total revenue in recent years. Primoris Services Corporation maintains long term relationships with many of these clients through master service agreements that span multiple years. The diversity of its customer base helps mitigate reliance on any single sector and provides opportunities for cross selling services across different markets.